Reason Magazine
- reason.com
- reason.tv
- reason.org
- Donate
- Site Search:
Reason on Facebook
Reason on Twitter
Reason on YouTube
Reason RSSGet Reason E-mail Updates!
Manage your Reason e-mail list subscriptionsadvertisements
The Growing Case for Inflation
Why rising prices will help the economy
One of the great achievements of our time has been the conquest of inflation. In the 1970s, it ravaged our savings, raised our taxes, and kept the economy on a roller coaster. So it is a measure of our current economic crisis that the return of inflation might be the best thing that could happen.
Over and over during the postwar era, the Federal Reserve has decided that overcoming inflation was worth suffering a recession. This time, it ought to recognize overcoming a deep recession is worth enduring some inflation.
The existing downturn already looks certain to be the most severe since 1981-82, when unemployment soared to nearly 11 percent. There is even a real risk of a painful deflation. The World Bank fears we are entering the worst period since the Great Depression.
Faced with that looming catastrophe, the federal government has been considering or doing things that were once unthinkable—partly nationalizing banks, buying up debt, bailing out the Big Three automakers, spending hundreds of billions of dollars on infrastructure, and doubling or tripling the budget deficit.
It's possible these measures can restore the economy to health. But only possible. What is certain is that they will produce a government that is bigger, more expensive, more overextended, and more involved in the operations of private businesses. That result, rest assured, will live on after the crisis is over.
So some economists have concluded that expanding the money supply is the worst option except for the others. Kenneth Rogoff of Harvard writes that "a sudden burst of moderate inflation would be extremely helpful." Casey Mulligan of the University of Chicago says, "Inflation will alleviate some economic problems; prolonged deflation will aggravate them."
Gregory Mankiw, who was chairman of the Council of Economic Advisers under President Bush, urges the Federal Reserve to abandon price stability and commit itself to modest inflation. David Henderson of the Hoover Institution says that if the choice is more federal spending or rising prices, he prefers the latter.
It's not hard to see why. Most of our problems stem from the bursting of the housing bubble. That sent home prices plunging, which reduced the value of mortgages and mortgage-backed securities, which caused losses at banks, which forced a cutback in lending, which squelched consumer spending, which brought the economy to a halt. Which started the whole miserable cycle over again.
But if the crisis stems from declining real estate values, why not stop them from declining? A spell of inflation would arrest the slide by pushing up the price of everything. As home prices stabilize, mortgage-backed securities would regain value, banks would get financially stronger, and loan officers would stop hiding in the vault.
Consumer spending would also revive. In the first place, those who want to buy new cars or remodel their kitchens would be able to borrow money to do so. In the second, people whose money is eroding in value would be motivated to spend today rather than tomorrow—the opposite of the incentive when prices are falling, as they are today.
Unlike measures to bail out homeowners, inflation wouldn't spawn a new bubble by stimulating overinvestment in real estate. Home prices might rise, but other prices would rise still more, pulling investment away from the housing sector until the current glut subsides.
The best part of inflation is that it avoids the need for the government to embrace vast spending initiatives and micromanage capitalist enterprises it is not equipped to run. And unlike government programs, inflation doesn't last forever.
One of the historic evils of inflation is that by reducing the value of debt, it rewards borrowers while punishing lenders. But this time, both sides may gain from a rising consumer price index—borrowers because their properties will be worth more than they owe, and lenders because their customers will find it easier to meet their obligations.
Once inflation has performed its useful role, it will have to be tamed. But the Fed has a lot of experience doing that. What it doesn't have is experience bringing the economy out of a deep recession or a depression.
Inflation is not a good thing, any more than powerful, toxic,
nausea-inducing chemotherapy drugs are a good thing. But when you
have cancer, the one thing scarier than the cure is the
disease.
COPYRIGHT 2008 CREATORS SYNDICATE, INC.
|12.22.08 @ 7:30AM|#
When did Chapman turn into a larval Krugman?
The arguments for Inflation were bullshit when kings first started
shaving coins, and they're still bullshit today.
If it were possible for inflation to improve an economy, Zimbabwe
would be the richest country in the world.
-jcr
|12.22.08 @ 7:33AM|#
I'm trying to remember if I've read anything more asinine than
this article in Reason in the last couple of years, and while the
"Obama/McCain/Huckabee/Clinton might not be so bad" tripe comes
close, this one still takes the cake.
I'm starting to think that Lew Rockwell's not exaggerating when he
rakes Reason over the coals.
-jcr
sage|12.22.08 @ 7:54AM|#
If it were possible for inflation to improve an economy,
Zimbabwe would be the richest country in the world.
Oh, come now, the article spoke of "some" inflation. Not inflation
on the order of 100,000%.
However, from TFA:
Most of our problems stem from the bursting of the housing
bubble. That sent home prices plunging, which reduced the value of
mortgages and mortgage-backed securities, which caused losses at
banks, which forced a cutback in lending, which squelched consumer
spending, which brought the economy to a halt.
Actually, that first sentence should read: Most of our problems
stem from the unnaturally low interest rates that were set by the
federal reserve to encourage easy credit and spending cycles, which
helped to inflate the housing bubble.
CrackerBarrel|12.22.08 @ 7:55AM|#
I'm a techie, not an economist, but JCR's comment on inflation
makes sense to me.
It sounds like Chapman expects moderate inflation to be another
"rising tide that raises all boats." But I don't get it. The
housing bubble raised housing prices *relative* to everything else.
I thought that the problem with housing now is having to clear the
market of a lot of properties that aren't selling because they're
*over-valued*.
Inflation will raise prices and costs of almost everything,
together. Chapman even says so. Maybe lenders will get their money
back, but one thing that doesn't go up with inflation is the amount
of the monthly payment on a loan. The lender ends up with less real
value from the loan than expected.
BTW, let's call "inflation" by a more realistic name: "currency
depreciation." That states more clearly that the reason there are
more dollars chasing goods and services is because they're worth
less.
Other things that won't rise with currency depreciation are the
values of savings accounts, money market funds, annuity
distributions, pensions and social security. I'm a retiree, and
Chapman's ideas make me uncomfortable.
If there's something I'm missing here, I'd welcome the
education.
CrackerBarrel
|12.22.08 @ 8:00AM|#
BTW, let's call "inflation" by a more realistic name:
"currency depreciation."
I think I'm ready to cut to the chase and just call it
counterfeiting or fraud.
-jcr
KipEsquire|12.22.08 @ 8:11AM|#
I challenge Chapman to walk into any middle-class kitchen in
America and explain to the mom sending her kids off to school how
she will be better off paying $5 for a box of corn flakes rather
than $4.
(Corn farmer's kitchens, maybe, but no one else's.)
|12.22.08 @ 8:21AM|#
I think I'm ready to cut to the chase and just call it
counterfeiting or fraud.
Money backed only by the faith and credit of an institution
demonstrating it deserves neither could indeed be called a lie.
Travis|12.22.08 @ 8:28AM|#
"And unlike government programs, inflation doesn't last
forever."
Yes it does. Unless we go through a period of deflation the
inflated dollars will never recover their former worth.
|12.22.08 @ 8:43AM|#
Corn farmer's kitchens, maybe, but no one else's.
No, they'd lose too. The beneficiaries of inflation are those
people who first get the newly-created currency to spend. That
would be any of the crooks who get to borrow from the Fed (which
now includes hedge funds! What next?).
-jcr
|12.22.08 @ 9:07AM|#
So much suck, so little time.
Unlike measures to bail out homeowners, inflation wouldn't
spawn a new bubble by stimulating overinvestment in real estate.
Home prices might rise, but other prices would rise still more,
pulling investment away from the housing sector until the current
glut subsides.
With predictive powers like that, you should have retired on your
lottery winnings years ago. What does your High Def crystal ball
say about the Super bowl?
|12.22.08 @ 9:09AM|#
Wait a minute, I'm confused. Are you talking about manipulating the economy for some greater good? I thought we left that sort of thing to the morons in office...
|12.22.08 @ 9:36AM|#
Why not just reprint some chapters from Keynes's General Theory
and call it a day, Chapman?
"Guys, look, all we have to do is *clandestinely tax savers* and
everything will be great!"
|12.22.08 @ 9:38AM|#
Chapman seems to rely on an omniscient brilliance among the
likes of bernanke, paulson and others in civil service.
If the fed still has unconventional tools in its quiver, one has to
wonder why noone can define jsut what those tools are--or why noone
has ever used them before.
When we finally realize that fed policymakers are making it up,
only then will we face up to what awaits...a long period of debt
destruction.
Why anyone (SC) thinks that the fed can manage anything about the
eceonomy is beyond me.
But I am one of the idiots who thought I was supposed to save my
money.
|12.22.08 @ 10:01AM|#
This is absolutely a new low.
You know what else is great? Big government. Oh, and wars. Wars are
great for the economy! Wars and inflation. Doesn't get much better
than that.
|12.22.08 @ 10:01AM|#
You know, it's just stunning that this kind of neo-Keynesian bilge still gets a serious audience with the entire credit/inflation-driven fiat money system collapsing around us. What exactly is it going to take for people like Chapman to think Keynes, Bernanke, Krugman, et al were *wrong* on monetary policy?!
Nick|12.22.08 @ 10:22AM|#
Actually, Mr. Chapman, some deflation is good for consumers in a
tough economy, especially considering the rising unemployment. The
longer people's money can go in this economy, the better. That's
why stagflation sucks so badly - it makes what is already a
financial pinch even more difficult.
Your argument that people are more likely to spend in an inflated
economy is also false - for one, the low housing prices in the
current market are actually encouraging people to buy. But in a
stagnating economy, people are likely to be more conservative,
whether prices are going up or down.
However, prices going down will always make consumers more likely
to spend than prices going up. For one, I've been driving a great
deal more and I spent more for gifts this year than I ever have.
Because of the deflation combined with my lack of investments, the
recession has actually helped me. That's anecdotal evidence, of
course, but it makes sense why one would be more likely to spend
when prices go down instead of up.
Furthermore, isn't some deflation necessary for an overheated
economy? Prices of housing and gas are dropping because they were
way overpriced this time last year.
Ken T.|12.22.08 @ 10:33AM|#
An article in reason that basically advocates a weak currency and lots of government intervention in the economy is rather disheartening.
|12.22.08 @ 10:47AM|#
Ditto all the above.
Most of our problems stem from the bursting of the housing
bubble.
FAIL Most of our problems stem from all segments of the economy
being over leveraged (i.e. we've been paying our bills with IOUs).
Well that and appointing Chicken Little as Secretary of Treasury.
All the TARP, bailouts, loans, stimulus, whatever you call it, are
attempts to put keep running up our tab, and therefore doomed to
worsen the problem
Note to whom it may concern on the Reason staff: ENOUGH
WITH STEVE CHAPMAN!!!
Tyler|12.22.08 @ 10:55AM|#
Steve Chapman on the case for inflation? To put it bluntly, I'm
not convinced.
Funniest part was how he expects real estate prices to rise without
considering that fact that ALL prices will rise. I would just LOVE
for my dollars to be worth less, thank you very much.
|12.22.08 @ 10:59AM|#
I already left a comment, but every time I check Reason for an
update I notice this article. I need to say one more thing.
I don't follow Reason for authoritarian advocacy; if I wanted to
subject myself to Making the World a Better Place by Controlling It
101 I'd be a Republican/Democrat. This is not the kind of thing I
want to warm up with on a Monday morning.
Sam Grove|12.22.08 @ 11:20AM|#
What about later?
Won't the gov have to keep inflating to prevent a correction?
Is Chapman looking for a job with the new administration?
|12.22.08 @ 11:21AM|#
Most of our problems stem from the bursting of the housing
bubble.
This is such a kindergarten level of analysis of the situation,
it's a wonder the S's aren't turned backwards.
|12.22.08 @ 11:33AM|#
This dovetails nicely with the Obama/Biden plan to expand the "middle class". Once we establish an income level which defines "middleclassness" all we need to do is inflate the currency until everybody is making that much money. Problem solved.
|12.22.08 @ 11:36AM|#
Won't the gov have to keep inflating to prevent a correction?
Actually, it's pretty hard to find a fiscal year out of the last
seventy or so that this was not the case.
Nick|12.22.08 @ 12:05PM|#
Chapman's logic: Higher housing prices will encourage more
people to buy houses, and thus our economy will recover.
Our logic: Wow, you're an idiot. Why does Reason continue to run
Chapman's articles? (Oh, yeah - because of the attention they
get...)
I have no problem with alternative points of view; for example when
Ron Bailey argues that global warming is a significant issue, I'm
willing to listen to him. That's because his point of view is well
argued. I have no problem with Reason running articles that differ
from the libertarian norm - I don't always agree with the
libertarian norm myself - but all articles should at least maintain
a modicom of logic. I could understand libertarian cases for why
Obama or McCain are preferable for libertarians (compared to the
other), but I simply can't understand this...
|12.22.08 @ 12:51PM|#
Damn. After I read the article, I wanted to vent. But you guys
covered my points already!
Let's let inflation raise the price of houses so we can borrow
more?? Are you nucking futs? Where to they find these asshats?
|12.22.08 @ 12:57PM|#
Inflation is good for the economy? Oh, cool! C'mon everyone - let's all go out and write a bunch of hot checks and do our bit for the economy. I wonder if Chapman would like to cash my personal note for a couple of million? What! You don't think I'm good for it, Stevie boy? What in hell difference does that make - have a little faith, dude.
alan|12.22.08 @ 12:58PM|#
This article will live in infamy. Years from now we will still be referring to it as the Chapman Fallacy.
|12.22.08 @ 1:01PM|#
have a little faith, dude
Besides - maybe the crooks in Washington will give me a
bailout.
alan|12.22.08 @ 1:06PM|#
Even if this wasn't out to lunch in the theoretical department,
this little snippet from Lew should tell you all you need to know
why The Great Inflation II will not succeed:
Writes a friend:
Now, in Japan, it is end of the year party time (Bonenkai). I've
been drinking with my co-workers as well as some very high up
people (CEO's & presidents of huge companies like Sony and TV
Tokyo). These guys seem to be getting desperate.
They told me that they would even accept advertising contracts for
$2000 - $3000 dollars! (It used to be that if you weren't talking
at least $25,000, you couldn't even get a receptionist to talk to
you. One CEO of a major satellite TV channel (owned by one of the
biggest companies in Japan) said that, the ways things are now, any
money is acceptable. TV Tokyo sales dropped 69.7% up until August
this year (I suspect it will be even worse by year's end).
Ex-CEO guy dropped my jaw when I was mentioning about how the US
government was destroying trust in the US economy and that, soon,
Chinese and Japanese banks are going to quit buying bonds... He
floored me when he said, "We have already stopped"
(understand that these guys know the CEO's of the big Japanese
banks as those are their financial backers).
Kolohe|12.22.08 @ 1:09PM|#
David Henderson of the Hoover Institution
says that if the choice is more federal spending or rising prices,
he prefers the latter.
I'm trying to figure out if this is Nixon going to China or
Napoleon going to Russia.
Kolohe|12.22.08 @ 1:16PM|#
I'm trying to remember if I've read anything more asinine
than this article in Reason in the last couple of years
The '21 year drinking age rulz!' was worse.
Once inflation has performed its useful role, it will have to
be tamed. But the Fed has a lot of experience doing
that.
And always causing a economic slowdown when they do. The worse the
inflation the worse the slowdown.
Now, I believe in the modern economy that deflation even moderate
deflation, is somewhat worse than moderate (i.e. 1-2% what Robert
Samuelson called 'zero') inflation. But celebrating inflation is
like celebrating chemo - it's a nasty cure for a nastier disease -
and may not always work, and possibly could backfire. And Chapman
gives his usual facile analysis.
Egosumabbas|12.22.08 @ 1:20PM|#
So wrong on so many levels.
Assuming that inflation rewards debtors by inflating away their
debt... creditors would STILL be hesitant to lend because of the
negative return on real investment. In other words, interest rates
would have to be high relative to the rate of inflation (not close
to zero as they are now). Also, the WAGES of the debtors would
still have to go up even though the relative value of their debt
would go down. If 1 million dollars of debt gets devalued to
100,000 dollars of debt, it won't matter if Joe Six Pack still
makes 10 bucks an hour. As was proved in the housing bubble,
inflation doesn't inflate the prices of all things equally. In
fact, I would argue that any attempt by the government to inflate
to save the economy will pump up assets that the government least
expects (internet bubble, housing bubble, oil bubble... what next,
gold or green tech bubble?)
This article was beyond asinine.
alan|12.22.08 @ 1:30PM|#
Now, I believe in the modern economy that deflation even moderate
deflation, is somewhat worse than moderate (i.e. 1-2% what Robert
Samuelson called 'zero') inflation. But celebrating inflation is
like celebrating chemo - it's a nasty cure for a nastier disease -
and may not always work, and possibly could backfire. And Chapman
gives his usual facile analysis.
I understand where you are coming from as I believe we wont see an
alternative to fiat monies in our lifetime, and I worry more about
what this (conventional Keynesian economic model) does to the
traditional positive role of savings in a capitalist economy than I
do the monetary policy, but the error with Chapman's thinking is it
kicks the problem down the road just a little further for another
day, whereas all external factors that made it possible to do just
that in the past are now telling us we have to deal with it
now.
|12.22.08 @ 1:34PM|#
Suggested new article title:
Dr. Bernankelove, Or, How I Learned to Stop Worrying and Love
Destroying Savers, by Steve Chapman
I, Kahn O\'Clast|12.22.08 @ 1:39PM|#
The obvious solution is no solution: let the markets work. But
that would likely lead to a serious economic dislocation and a
possible depression and deflation period which could prove
chaotic.
If the government needs to try to "solve" this situation -- which
it largely created -- then the answer is to tackle the root
cause:
Government should nationalize all the mortgages and restructure all
of them at a 4.5% rate with a 20% hair cut to face value and could
even throw in a 1-year payment holiday. This would provide
immediate payment relief, make debtors less upside down on their
mortgages thus making the housing market more flexible.
As new houses sell, any profit over the value of the mortgage must
first go back to paying off that haircut, thus paying back
taxpayers. Plus, any profit above that should be taxed as regular
income.
Reforms to accompany this: liquidation of Fannie and Freddie;
elimination of tax deduction on mortgage interest; elimination of
tax break for selling homes (profit taxed as regular income);
future private sector securitizations must be accompanied by a 20%
vested stake by issuing banks (on the hook for at least 20% of the
security) and issuing banks must also be provider of payment
collection service.
CDS market should be closed: all outstanding contracts to be netted
off through clearinghouse with losses realized.
|12.22.08 @ 1:40PM|#
Ever heard of stagflation, "stagnant inflation"? It was the
1970s. Maybe in the USA you did not get it so bad, but it ravaged
Europe. Yes, it did exactly what the article suggests, make
virtually any mortgage sensible. As long as you could pay the 12%
mortgage rate for the first year or two. And as long as you did not
mind the high unemployment. Mind you, I can't say if it is better
or worse than government bailout (which is printing money -
inflationary - anyway). Either way you are bailing out the mistakes
and placing the burden on those who were sensible.
Stagflation is not a fix.
|12.22.08 @ 1:50PM|#
|12.22.08 @ 1:53PM|#
You go "JCR"!!!!!! And everyone else who sees through this no
pain, lets misprice assetts so we can all be well off. My house has
dropped 150K, or half its bubble value. It is a paper loss (still,
I wish I had taken those paper profits), but we can't use resources
efficiently by pretending we are worth a million, when we really
OWE a million.
Saying a "little" inflation will help you is like saying a little
shotgun blast to the head will help your brain cancer.
Jon Hege|12.22.08 @ 1:56PM|#
INFLATION = TAXATION
The Federal Reserve NOT federal. There is NO reserve.
It is a private corporation with ZERO government oversight.
The Federal Reserve CAUSED this recession. Why would we expect them
to fix it?
This is one of the worst articles I have ever read on Reason.
END THE FED NOW
http://www.endthefed.us
|12.22.08 @ 2:06PM|#
Inflation does not create real wealth, it only redistributes it.
It takes savings and fixed wages from the poor, middle class and
elderly and drops it in government sponsored accounts.
It creates no real wealth because the wealth contained in the
savings has its own opportunity cost. There is no Koolaid in the
world that can save you from this paradox. If the wealth of the new
money has a multiplier, is it higher than the multiplier of the
opportunity cost of the private savings?
I have a sneaking suspiscion of the real world answer.
Finally, this is the very worst article I have ever read on Reason,
ever. It sounded like Chapman was giving Krugman a handjob over
cocktails...
dfd|12.22.08 @ 2:08PM|#
Oh, come now, the article spoke of "some" inflation. Not
inflation on the order of 100,000%.
100,000% would be a major achievement! Actually Zimbabwe's
inflation rate
is more like 231,000,000%
For those not inclined to click on the link, there's a picture of a
sign in a South Africa restroom that says:
"TOILET PAPER ONLY TO BE USED IN THIS TOILET
NO CARDBOARD
NO CLOTH
NO ZIM DOLLARS
NO NEWSPAPER"
|12.22.08 @ 2:16PM|#
Chapman -- was this article a case of trolling in the hope of
drawing comments and thus more ad revenues, or an incredibly ironic
and deadpan satire of some of the people who post here? If so, well
played, sir.
If you actually believe this bilge, though -- bah.
LibertyMark|12.22.08 @ 2:17PM|#
Shameful article for Reason.
This is what happens when friends let their friends become
utilitarians.
As is typical for utilitarians, it is the underlying assumption
that I find most galling: That it's obvious that something
must be done, so all that's left is to find the least damaging
something.
piperTom|12.22.08 @ 2:23PM|#
Another challenge for Chapman: come help me explain to my aging
mother why her (CD heavy) life savings need to be robbed...
Oh, wait! It's for "the greater good." It always is.
Egosumabbas|12.22.08 @ 2:26PM|#
@prolefeed:
Perhaps this was Champan's post-modernist attempt at a modest
proposal?
|12.22.08 @ 2:31PM|#
From what I can tell, and I am certainly no economist, it seems
that inflation and too-easy money led to an overvaluing of assets.
This bubble, when popped, creates the need for a painful, but
necessary, economic reset. Chapman seems to be arguing that we
float these high asset prices for a period of time and do not let
the market correct itself. Yes, deflation is bad, but it its only
temporary, since as prices fall, demand naturally rises, even
despite the tendency to save now while prices are falling.
From what I can tell, deflation is certainly bad, but will
eventually end. Inflation is also bad, and helps to exacerbate
asset bubbles by providing easy money to lending institutions, and
like JCR said, the ones who receive the money, ie the ones who deal
directly with the fed, are the ones to benefit from inflation. The
problems of inflation hurt everyone, and never go away. The
problems of deflation hurt the ones who lose their jobs, which is a
temporary problem, and eventually will go away. Again, this is if
my understanding is correct...
Nick|12.22.08 @ 2:33PM|#
LibertyMark,
I tend to find many of my beliefs intersecting with utilitarianism
(especially considering that the original utilitarians were pretty
darn classically liberal.) The thing about utilitarianism is, there
has to be some basis in fact before you select the solution.
Defaulting to "get the government to fix it" is not utilitarianism,
in fact, the inefficiency of government to do a good job is more
often than not the opposite of a rational utilitarian solution.
Everyone argues that their solution is the best and will do the
most good for the most people in the long run.
That can also mean that there is a valid case that doing nothing
will do the most good in the long run, considering the high costs
of inflation, debt and likely expansion of bureaucracy that comes
from government intervention. The existence of the moral hazard
alone may be more damaging in the long run than forcing companies
to find their own ways out of the hole, by rewarding failure and
encouraging mediocrity. Also, the expansion of easy money which
Chapman seems to be advocating here IS what got us into this hole
in the first place. So I guess the solution is to make more bubbles
to burst at some later date?
|12.22.08 @ 2:37PM|#
Double post, I know, but this thought just came to me. Isn't the
real goal to just keep the currency stable, neither deflating or
inflating? Isn't stability the best way to keep confidence in the
market? I feel like there is an interest in preventing deflationary
spirals, since the "save now for tomorrow" mentality is unnatural
to the market and only caused by monetary policy. On the other
hand, we shouldn't try and inflate either, simply stop the
deflationary spiral, for similar reasons.
Why couldn't everything be so simple as the social liberties
arguments? This economic stuff is confusing as hell, with a million
factors pulling in every direction.
|12.22.08 @ 2:39PM|#
Lots of commenters here rail against Chapman articles being
posted on reason, but I support them for two reasons:
1) They give fodder for the cannons. This kind of nonsense helps
all the libertarian ninjas on this site sharpen their swords for
when they have real world conversations with people spouting this
drivel.
2) I highly suspect this is sarcasm. Most people only know when
you're being sarcastic when you use a sarcastic tone of
voice. Real sarcasm is saying something so ludicrous, so
outrageous, that no one who heard what you said could ever have
possibly thought you were being serious. I feel Chapman's sense of
sarcasm may be way off the meter,
Either that, or he's a blithering moron who just likes the way the
word "libertarian" sounds.
Lucas|12.22.08 @ 2:43PM|#
Inflationary bubble-building from Reason? You guys are
libertarians, right?
You should recall that FDR's attempts to hold up prices led to 10+
years of severe depression. All an increase in house prices will do
is direct more "investments" into housing.
Which caused the problem to begin with. Inflationary strategy by
the Fed led to houses which rose in price by 10% per year, leading
private investors to rush to this option.
Then, "knowing" they'd receive the mortgage equivalent of 10% per
year price increases, large investment firms took on more debt
(usually to buy more mortgages).
But all inflationary policies must end. Eventually, margin calls
will be made before the theoretical income has accrued, and
companies leveraged 32-1 will collapse. All of the consumer
spending ultimately based on them will collapse as well.
This, of course, leads to a drop in prices. First, because
consumption (demand) has dropped. Second, because reduced demand
leads to reduced investment incentives and rather increases the
incentive to sell.
This drop in consumer prices, after 20 years of heavy Fed-induced
inflation and a sudden "adjustment" (you getting canned), is the
only thing which helps the consumer and will eventually lead to
asset adjustment as well.
The houses which were overbuilt for a decade need to be cleared
out- let their prices drop. Car companies which only existed for
the past decade because of cheap financing have overexpanded- let
them die, and their assets will be sold to more competent
parties.
"Some inflation from the Fed" will be worse than Obama's $1
trillion spending spree. We will get both, of course.
|12.22.08 @ 2:46PM|#
The obvious solution is no solution: let the markets work.
But that would likely lead to a serious economic dislocation and a
possible depression and deflation period which could prove
chaotic.
Yes, it might get some bastards in high circles strung up; at the
least it might result in Dr. Tar and Professor Feathers putting in
an appearance. 'Course, there is always martial law and a recently
re-deployed combat division to help enforce it, so not to
worry.
Oh, one thing more - if any of you had any ideas of taking your
assets and leaving the country, forget it. Thanks to a nice little
amendment tacked onto a bill and quietly signed into law by that
good ole boy, Dubya, this last summer, you are free to quit the
game, but you must leave your winnings at the door. Tell me the
scum didn't see this economic crisis coming months ago.
DixieFlatline|12.22.08 @ 2:46PM|#
Americans are really funny. They think they can make the economy
healthy by printing money, instead of rolling up their sleeves and
going back to work.
The only reason Americans alone in this world can maintain such
stupid ideas, is that they have the world reserve currency, and the
inflation is paid for by other countries who trade with the US.
Zimbabwe can't do it. Canada can't do it. The UK can't do it.
|12.22.08 @ 2:51PM|#
Oh, wait! It's for "the greater good." It always
is.
Yes, and isn't it odd how the "greater good" is always the greater
good of someone else?
LibertyMark|12.22.08 @ 2:52PM|#
Nick,
It is true that a consistent utilitarian and a consistent
libertarian will come up the same "solution" fairly often.
But utilitarians seem to me to be completely unmoored from any
concept of a philosophical bedrock upon which to build ideas. They
say things like "the most good for the most people". It is
impossible to define that. Usually, in an attempt to define it,
authority is invoked and government power grows.
I refuse to support the violation the rule of law or of a single
man's rights even if some greater number of people get some
"good".
|12.22.08 @ 2:53PM|#
The banner says "Free Minds and Free Markets", but not including advocacy of a free market in money, evidently. The unstated premise of the article is that an armed gang has the right to tell me what medium of exchange I can use, or else.
Egosumabbas|12.22.08 @ 2:59PM|#
"Double post, I know, but this thought just came to me. Isn't
the real goal to just keep the currency stable, neither deflating
or inflating?"
What Milton Friedman argued is that all you would need is a
computer set the interest rates automatically to keep inflation at
the same % year after year. Why put a human there who's going to be
tempted to open the spigot every time the president starts
whining?
Justin|12.22.08 @ 2:59PM|#
Steve Chapman, you sir are a sonofabitch.
Am I off my goddamn rocker, or isn't this the same clown that wrote
an article against lowering the drinking age a month or two ago?
Why-oh-why is a prohibitionist counterfeiter still published
here?
|12.22.08 @ 3:00PM|#
Inflation got us into this mess. Inflation created the bubble by
injecting money and cheap credit into the system. This turned
growth into a boom as malinvestments were made. It's fun to blame
mortgage securities, but they were only the pin that burst the
bubble. They were the rude awakening that something was not
right.
Expecting the same inflation to get us out is stupid.
|12.22.08 @ 3:04PM|#
yeah...they'll just press the "moderate inflation" button and everything will be cool. i thought this was supposed to be a free-market publication. what a joke.
Anthony Gregory|12.22.08 @ 3:14PM|#
"David Henderson of the Hoover Institution says that if the
choice is more federal spending or rising prices, he prefers the
latter."
David Henderson is a friend of mine. But we should all know that
we're not about to see the government inflate AND hold the line on
spending.
theCL|12.22.08 @ 3:24PM|#
Apparently Tricky Dick was right all along ... "we're all
Keynesians now!"
Sad commentary indeed. Wait! I know ... why doesn't the Fed just
print each and every American a billion-trillion dollars? The
economy would thrive, and we'd all be rich! Yea!
I have no further comment other than to agree with jcr who said of
inflation:
"I think I'm ready to cut to the chase and just call it
counterfeiting or fraud."
|12.22.08 @ 3:25PM|#
"But we should all know that we're not about to see the
government inflate AND hold the line on spending."
What better way to get rid of the budget deficit and the national
debt!
subzero|12.22.08 @ 3:27PM|#
god! reason sucks so much.
when will they drop the label "libertarian" and stop confusing
everyone? jesus fucking christ, keynes was not a libertarian!
|12.22.08 @ 3:29PM|#
"Thanks to a nice little amendment tacked onto a bill and
quietly signed into law by that good ole boy, Dubya, this last
summer, you are free to quit the game, but you must leave your
winnings at the door."
Link?
|12.22.08 @ 3:41PM|#
I beg you all to take some time and visit these links.
http://www.mises.org/
http://www.kitco.com/ind/schoon/dec222008.html
http://www.lewrockwell.com/
|12.22.08 @ 3:46PM|#
I am glad my subscription to Reason is running out. If I wanted to read about why inflation is good I would just read any number of countless other publications such as the NY Times!
Mike Laursen|12.22.08 @ 3:50PM|#
I don't have anything to say that hasn't already been said, but
I want to pile on.
As a person who works hard, pays his mortgage on time, and saves
for the future -- all that stuff I was told responsible adults are
supposed to do -- I'd like to take this opportunity to say: Fuck
you, Chapman!
Egosumabbas|12.22.08 @ 3:53PM|#
I think Chapman just gave the Lew Rockwell crew a whole month's worth of rotten tomatoes to throw at Reason.
Egosumabbas|12.22.08 @ 3:54PM|#
may I add:
www.samizdata.net/blog/
globaleconomicanalysis.blogspot.com/
themessthatgreenspanmade.blogspot.com/
|12.22.08 @ 4:09PM|#
Silentz,
I was refering to the Heroes Earning Assistance and Relief Tax
Act of 2008 - or rather a provision tacked onto it.
Here's one link to one discussion of it, which I found. I'm
sure there are plenty more mentions of it on the Web.
LibertyMark|12.22.08 @ 4:11PM|#
Even though I called this article shameful, what I find more
shameful is the adolescent and petty fight between lewrockwell.com
and reason.com.
There are articles that I would call shameful on lewrockwell.com as
well.
I frequent both sites, and my beef should always be with the
individual author and not the group as a whole.
We are a small band after all. I would think that this article is a
chance for both cosmos and paleos (or whatever the fuck ya'll want
to call yourselves) to pile on the derision.
Bob Kaercher|12.22.08 @ 4:16PM|#
Well, as another contributing writer of this periodical once
said, just as there are no atheists in foxholes, neither are there
any true libertarians in times of terrorism. So it shouldn't be too
surprising that someone else writing for this publication would
essentially claim that there are no true free marketeers in times
of recession.
It's that kind of muddle-headed doggerel that prompted me to drop
my subscription. I obviously still visit the web site, but that's
the only way I can access whatever is decent about this publication
without subsidizing garbage like Chapman's.
Hey, Reasonoids: Extremism in the defense of principles is no
vice.
Mike Laursen|12.22.08 @ 4:23PM|#
I obviously still visit the web site, but that's the only
way I can access whatever is decent about this publication without
subsidizing garbage like Chapman's.
I really like the spectrum of libertarian thought in
reason. That they publish a boneheaded article like
Chapman's once in a while just proves that they're trying to be
very open-minded.
|12.22.08 @ 4:24PM|#
There are articles that I would call shameful on
lewrockwell.com as well.
Which website has articles that make more sense? Because THIS one
praising inflation a la Krugman really went too far in its
kookiness.
LibertyMark|12.22.08 @ 4:26PM|#
open-minded,
Yes, I actually like it, too. This article an another one by some
middle eastern woman who wanted to forcibly close all the muslum
schools in the US about made my head explode.
But, I would almost prefer the occasional head-exploding article
than the tiresome purity tests of rockwell's crowd.
|12.22.08 @ 4:32PM|#
As a person who works hard, pays his mortgage on time, and
saves for the future -- all that stuff I was told responsible
adults are supposed to do -- I'd like to take this opportunity to
say: Fvck you, Chapman!
Yeah, baby! Right on!!
Oh, and buy gold & silver - which is another way of saying:
Fvck you! to these Krugmanites.
|12.22.08 @ 4:35PM|#
But, I would almost prefer the occasional head-exploding
article than the tiresome purity tests of rockwell's
crowd.
Strange preferences. I prefer the purity of Lewrockell.com's
PRINCIPLES and SOUND economics than the namby-pamby, touchy-feely
"economics" of some of Reason's "writters".
Bob Kaercher|12.22.08 @ 4:44PM|#
"That they publish a boneheaded article like Chapman's once in a
while just proves that they're trying to be very
open-minded."
And "open-mindedness" in pursuit of boneheaded ideas is no
virtue.
|12.22.08 @ 4:45PM|#
One of the great achievements of our time has been the
conquest of inflation.
Once an article starts with a dumb statement like the above, I know
I am in for some trouble. Chapman does not disappoint in his
ignorance or facetiousness, that's for sure. He speaks of
"inflation" as if it were an animal or a disease to conquer.
Inflation is the continuous increase in the money supply by a
central bank, and it is only through a fiat monetary system that
inflation can reach the levels we have seen in 18th Century France
(with its Assignats), or the nascent USA, or the whole of the XX
Century.
It is the FED that generates inflation, because that is all it can
do, and yet, Chapman talks about the FED as if it were like the
dutch boy holding the water in the levee. This is either a case of
crass hypocrisy or stupendous ignorance of reality.
Inflation DESTROYS wealth - that is what it does. It does NOT save
the country from a recession, it can only PROLONG it. It gives
people a false sense of prosperity at the beginning of an
inflationary process, but ends up gobbling up savings and
capital.
I don't know if Chapman is a Krugmanite, or a Keynesian, but
someone who adopts a pro-free market ideal (as Reason is supposed
to espouse) he is NOT.
|12.22.08 @ 4:50PM|#
Are you serious, Reason? This article is all the more reason for me to visit real liberty-minded websites and avoid this statist garbage. If I wanted to read about this idiotic brand of economics, I'd flip on MSNBC.
Douglas Gray|12.22.08 @ 5:00PM|#
This is one of the weirdest articles I've ever read in REASON.
The economies of virtually every industrialized nation are
suffering from excess capacity. As spending dries up, there is a
frantic but fruitless effort on the part of Government to get
people spending and extending their credit again.
At least with deflation, some spending continues as there is the
psychological response to bargains.
|12.22.08 @ 5:12PM|#
Inflation DESTROYS wealth - that is what it does.
No, I don't think so. Wars destroy wealth - inflation
redistributes it. Other than that nitpick, I agree with
you.
subzero|12.22.08 @ 5:20PM|#
smartass sob:
Inflation DESTROYS wealth - that is what it does.
No, I don't think so. Wars destroy wealth - inflation redistributes
it. Other than that nitpick, I agree with you.
It does destroys wealth, because the wealth is
redistributed from more efficient hands (they were able to acquire
it!) to less efficient hands. Thus, the people who benefit do not
use that wealth as efficiently and there is less wealth that would
have been if the redistribution have not taken place. Opportunity
cost IS a cost.
|12.22.08 @ 5:35PM|#
The Fed currently regards inflation as "the great Satan" of
economics and will do any and all things to avoid it (Including
gov't spending/involvement out the wazoo). To me, Chapman is simply
pointing out that moderate inflation (presumably meaning under 10%)
may be worth enduring if it means less government
involvement.
Like all things economic, inflation has it's advantages and
disadvantages. Inflation or not, deflation or not, government
involvement or not, we're in for a long, ugly, uncomfortable ride
till this massive deleveraging destroys enough wealth/debt to reach
a new steady state level again. No one was really as wealthy as
they thought they were in mid-2007. It was all an illusion (pulled
off with debt instead of mirrors). The end result of this "crisis"
("correction" is the more appropriate word) will be to bring us all
back to reality.
Interestingly, the people who will come out of this crisis with the
least lost will be home renters who have little or no savings but
manage to keep their jobs (or move to an equal/better job) "Woo
hoo! Gas prices are down, food prices are down, car prices are
down, home prices are down, ..."
Dylboz|12.22.08 @ 5:46PM|#
The Kotchtopus sellouts on the Reason editorial staff have caught a bad case of Krugmanitis! OH NOZ! When the so-called "libertarians" are on the Fed's monetary sodomy bandwagon, we're all DOOMED!
Jasonik|12.22.08 @ 5:56PM|#
NAL, just keep clicking your heels together...
"Government is not the problem - it
is the solution. Government is
not the problem - it is the solution.
Government is..."
(Pay no attention to the man behind the curtain.)
Bob|12.22.08 @ 6:25PM|#
I think I know why Chapman's here. Back when the Fairness
Doctrine still existed -- and nobody was willing to test the water
to see if it would still be enforced, which it probably would
not have been for several years before it was
pronounced dead -- CATO had a 3/week brief radio feature called
"Byline". It was said to feature commentaries by "liberal,
conservative, and libertarian" commentors, and Chi. Trib. columnist
Chapman was among them. This fit CATO's interest in putting out
libertarianism with a fuzzy face, for example "Inquiry" magazine,
and hoped to slip a syndicated series slanted toward libertarianism
past the Fairness Doctrine. So the libertarian "Byline" commentors
like the young John Fund were "balanced" by libertarian-leaning
"liberals" and libertarian-leaning "conservatives". Julian Bond,
who was added late in the game, stuck out among them like a sore
thumb, and Roy Childs explained to me that Bond was included
because the otherwise overall libertarian slant had become
unfortunately evident to many of the radio stns. that picked the
program up.
Steven Chapman was and probably still is,
libertarian leaning, in that he's more libertarian than the avg.
person. But I guess people, and he himself, might've gotten from
his identif'n with "Byline" the impression that he was considerably
more libertarian than that.
|12.22.08 @ 7:15PM|#
NAL, just keep clicking your heels together...
What the hell are you talking about? Did you even read my post? You
"libertarians" are apparently the ones who WANT gov't interference
in this case. Do you WANT the Fed to do all he can to avoid
inflation like the plague, meanwhile digging us in ever deeper?
|12.22.08 @ 7:38PM|#
NAL, there are upsides and downsides to inflation, but in the end, the downsides have it. By the way, us "libertarians" seem pretty decidedly against Chapman's want of the government to save us, somehow, by rearranging money. Inflation and deflation, in the long run, dont really matter. It is only during the time of the inflation or the tme of the deflation that they distort markets and redistribute wealth. Once the wealth has finished being redistributed, we can get back to working normally.
Jasonik|12.22.08 @ 7:40PM|#
The Fed inflates. That is all it does. That is its job. It can
do nothing else.
Inflation IS "government involvement."
There is no 'liberty' in having money silently stolen through
inflation whether at 10% or 3%.
Anyone who says "the people who will come out of this crisis with
the least lost" - as if it were acceptable that anyone
lose anything from intentionally created
government inflation - entirely misses the point of
opposing fiat money and the Federal Reserve System as a MAJOR
infringement on liberty.
|12.22.08 @ 8:28PM|#
A few weeks ago, I sent LewRockwell an email asking him to be
less vitriolic towards potential allies, including Reason. After
reading this article, I wish I hadn't.
I'm extremely disappointed.
concerned observer|12.22.08 @ 8:35PM|#
Idiots.
"Reason" logic:
1.Steve Chapman argues that moderate inflation can be good for an
economy by stimulating spending and investment ( a point argued by
most COMPETENT economists).
2. Zimbabwe has excessive inflation
3. Zimbabwe is poor
therefore
Steve Chapman wants teh U.S. to be like Zimbabwe!
concerned observer|12.22.08 @ 8:36PM|#
I swear, you people are the most uninformed yet arrogant assholes I've ever run across.
concerned observer|12.22.08 @ 8:38PM|#
I would refer you once again to the writings of John Maynard Keynes for reference. Getting out of your libertarian boxes for a while will do you all good.
Jeff|12.22.08 @ 8:38PM|#
I agree that the other options are even more bogus but I'm not
sure how wiping out the common American's savings will save an
economy. I guess if people are simply focused on the numbers of
dollars their house is worth instead of its intrinsic value you may
be able to trick people into thinking they're wealthy again.... but
isn't that how we got here in the first place? It may have been the
housing market that started the recession but the underlying fact
that we as a nation produce nothing and buy everything is what's
really at fault. If we deflate our currency to the point where we
can compete with other producing countries, our creditors will
build their businesses here and make us their sweatshop slaves. I
say not thanks. Lets let the people who screwed up fail miserably
and the rest of us can go on living our productive lives.
That said, I realize inflation will be an issue soon. I own a home
and a lot of gold and silver so bring on the inflation!
Jeff|12.22.08 @ 8:40PM|#
Keynesian economics were pretty much debunked, big boy. I'm all for free speech but if we had to burn one book, lets make it one by him.
The Wine Commonsewer|12.22.08 @ 8:57PM|#
Chapman is an idiot. There is no case for inflation there is
only a case for a stable currency.
He talks about conquering inflation as if the dollar hadn't lost
2/3 of it's purchasing power since inflation was conquered.
Frankly, I am not clear why Steve Chapman's syndicated columns keep
showing up here. Unless, of course, it is a plot to get all my
friends to send me emails saying WTF is wrong with Reason
Magazine?
I believe we each may drink (according to the rules) and I'm
getting one. Now.
concerned observer|12.22.08 @ 9:01PM|#
@Jeff-When exactly was Keynesian economics debunked? It seems more like free-market fundamentalist libertarian economics has caused more problems.
|12.22.08 @ 9:02PM|#
Oh boy the conspiracy nuts are big here today... i guess you
guys think Keynsianism really doesn't make any sense and a big bad
group of alien lizard Bilderbergers jsut get together and only
allow Keynsians to get jobs at the best newspapers? how else would
you explain it that the "genius" economist at the
gun-nut-school-of-jew-killing can't get high profile jobs?
face it, you have to have a brain to understand the new fiat
currency system if you want to ride horses and and complain about
progress then maybe a commidity based currency would work for you,
but if you want to be seen as half intelligent then just accept
that counterfeiting is good as long as you don't do it.
Mike Laursen|12.22.08 @ 9:41PM|#
And "open-mindedness" in pursuit of boneheaded ideas is no
virtue.
Dunno about that. Anybody who has ever worked in a field that
requires coming up with good ideas knows that if you aren't coming
up with some bad ideas, too, you're playing it too safe.
|12.22.08 @ 9:46PM|#
This may be the stupidest economic article I've read in some
time, and with the neo-Keynsians coming out of the woodwork these
days that is really saying something.
Housing prices are still far too high for people to afford them.
Creating another bubble to get the prices back up is just
prolonging the problem. Distorting the economy to divert resources
into failed and failing business just makes the depression drag on
that much longer.
But my favorite is the one about getting people to take debt to
remodel their homes. So now it's a good thing for the economy to
spend beyond your means to live in luxury? *THIS* is your solution
to our bubble economy?
Idiot.
|12.22.08 @ 9:55PM|#
> When exactly was Keynesian economics debunked?
1970's would be about as good an example as you can find. Ten years
of inflation and runaway government spending with no growth.
> libertarian economics has caused more problems.
So our economy, with 50% of household income consumed by the
government, with a freely inflating fiat currency, where industry
routinely employs more resource to comply with government
regulations than to handle their internal logistics, where you need
a freaking license to become a home decorator, is ... wait for it
... a LIBERTARIAN PARADISE!
Say what you like, but to run a consistently non-free system and
conclude upon its failure that freedom doesn't work is just plain
dumb.
|12.22.08 @ 10:09PM|#
CrackerBarrel said:
"Other things that won't rise with currency depreciation are the
values of savings accounts, money market funds, annuity
distributions, pensions and social security. I'm a retiree, and
Chapman's ideas make me uncomfortable."
CrackerBarrel, I guess you're just part of the healthy tissue that
sadly must be sacrificed to allow the chemotherapy to do its job of
killing the cancer. So just suck it up like a good boy scout for
the good of the country and the bullshit libertarians.
Richard Stands|12.23.08 @ 12:23AM|#
Does anyone have a link to the section of the U.S. Constitution which grants the federal government the authority to "fix" the economy of the nation? Maybe we should find that section before we entertain debate on the best "fix".
Bob Kaercher|12.23.08 @ 1:32AM|#
"Anybody who has ever worked in a field that requires coming up
with good ideas knows that if you aren't coming up with some bad
ideas, too, you're playing it too safe."
Gosh, Mike, you're right. Let's stop being so damn timid and just
copy the monetary policy of the Weimar Republic. Then when
inflation's taken such a toll that hardly anybody's got a pot to
piss in, we can take some comfort knowing that hey, you gotta try a
bad idea or two every once in a while if ya wanna live it up! Am I
right?
|12.23.08 @ 4:50AM|#
It is notable that only by rejecting libertarian economics can this article be defended. But to blame libertarian economics for America's ills is like blaming the Iraq debacle on America's non-interventionist foreign policy, or cocaine-related violence on the legalization of cocaine.
Reilly|12.23.08 @ 5:30AM|#
Oh, how we have lost our Austrian economic roots. Chapman uses the term inflation to mean a general rise in prices. This contrary to how the term is used by Austrian economists who define inflation as any rise in the amount of money circulating in the economy. Only by his definition have we defeated inflation in the past, not by the Austrian definition. If we believe in Austrian free market economics, then we believe that the Federal Reserve created this crisis by inflating, as defined by the Austrian school, loaning money to banks
|12.23.08 @ 5:33AM|#
laughable.
chemo destroys malignancies. the govt crimes you advocate are the
equivalent of injecting a tumor with growth hormone.
|12.23.08 @ 9:31AM|#
Why the hell is Reason still around? It doesn't offer anything but supply-side nonsense and beltway rhetoric.
|12.23.08 @ 9:51AM|#
Unfortunately, we don't have a choice in whether or not we experience a recession, as a recession is the necessary correction of mal-investment, which, being induced by a central bank's artificial manipulation of the interest rate via monetary inflation, cannot be avoided but only prolonged by additional monetary inflation, as this would only exacerbate the mal-investment.
Bob Kaercher|12.23.08 @ 11:13AM|#
Mike "Nope. You completely misconstrued what I said."
Just pointing out the logical conclusion of advocating flawed ideas
in the name of some fuzzy conception of "open-mindedness."
Wes Winham|12.23.08 @ 11:28AM|#
I expect better from Reason. If you're going to throw out flamebait articles, at least make them well-researched.
|12.23.08 @ 1:41PM|#
Thanks, UNreason. Buy gold. Abolish the Fed. Clean your weapons. Read Lew Rockwell.
Anthony|12.23.08 @ 1:44PM|#
I agree with most of the posters -- complete BS. I did not want to spend when things were good. Inflation will do nothing but begger those that tried to live our means.
|12.23.08 @ 1:53PM|#
After living through the ass rape of the 70s inflationary cycle
and watching our standard of living slip all I can say is Steve
Chapman makes Ben Bernanke look like a genius.
You could not be a bigger idiot if you tried.
|12.23.08 @ 5:32PM|#
Mr. Chapman
May God allow you to be retired and on a fixed income when your
wonderful wonkish wished for inflation takes hold.
Mitch|12.23.08 @ 6:50PM|#
Just checking in for a quick reminder of why I let my reason subscription expire...
|12.23.08 @ 9:29PM|#
Another excellent analysis by Mr. Chapman! I'm no economist, but he could be quite right in his unconventional approach.
Mike Laursen|12.24.08 @ 2:04AM|#
Just pointing out the logical conclusion of advocating
flawed ideas in the name of some fuzzy conception of
"open-mindedness."
You're confused about the difference among having a bad idea,
advocating a bad idea, and acting on a bad idea. The first is
harmless. Open-mindedness is just not being afraid of coming up
with a bad idea. Once you get into advocacy and action, you have
left the realm of "logical conclusion".
|12.24.08 @ 10:57AM|#
Game over man! Game over! Inflation is good? Linked at Reason?
Come on guys, you can find better writers than this buffoon.
Selling your soul for a few page views?
I owe Steve Chapman a small debt of gratitude. The last time I read
his column was in a 1995 newspaper. That day marked the last time I
bought a newspaper. I decided people with idiotic ideas do not
deserve my support.
Et tu, Reason?
On the bright side, the majority of the commenters here warm my
heart!
Billy Beck|12.24.08 @ 12:36PM|#
You people ought to be ashamed of yourselves in publishing this
fucking bullshit.
Matt Welch: turn out the lights, already. This party is definitely
over.
|12.24.08 @ 3:11PM|#
As someone who actually *is* an economist and a moderate
libertarian, I have to say this was a rather sensibly written
article. Reality requires well informed pragmatism with principles
in mind, not unthinking, dogmatic devotion to a set of axioms.
Consider that we have three options: let the Fed do some inflating
to soften the blows of the current recession; get the government
involved through fiscal policy to soften the blows of the current
recession; or allow hundreds of thousands of individuals to become
unemployed, thousands of firms to become bankrupt, lending and
credit to completely dry up, and a very long depression to set in.
Chapman is merely weighing the pros and cons of these approaches.
Sure, you can choose to grit your teeth and bear a harsh depression
brought on by inaction chosen now, and maintain true to whatever
principles you hold--but is your self-righteousness worth years of
lost production and human happiness?
Good for Reason to have a nicely balanced and intelligent spectrum
of views. Keep up the good work, despite what many of these "end
the fed" types say.
Sheldon Richman|12.24.08 @ 5:15PM|#
In addition to his other deficiencies, Chapman seems unaware of the changes inflation causes in relative prices in earlier versus later stages of production, shifting the structure of production out of alignment with people's true time preferences and savings predilections. That means when the inflation ends, a new depression will set in as the structure has to be realigned with reality. Something for us all to look forward to. Thanks, Steve.
Madison Classical Liberal|1.2.09 @ 10:02AM|#
I found out about libertarianism just last year and was so happy to begin subscribing to Reason to read articles from a libertarian view-point. How quickly I have become disappointed however. I just ended my subscription after reading this statist garbage written by Steve Chapman. I want to read a diversity of libertarian opinion, not libertarian and statist opinion.
Leave a Comment
More Articles by Steve Chapman
- Sarah Palin and the Decline of Conservatism, Steve Chapman, November 19, 2009
- Gay Marriage Lost, But It's Not Losing, Steve Chapman, November 16, 2009
- Muslims and Mass Murder, Steve Chapman, November 12, 2009
Related Articles (Economics)
- Treating Wall Street Like the Mafia, Anthony Randazzo, November 20, 2009
- Worse Than Taxes, John Stossel, November 19, 2009
- Globalization With a Human Face, Shikha Dalmia, November 18, 2009
- Where’s That Inflation?, Veronique de Rugy, November 17, 2009
- Bernanke’s Philosopher, Penn Bullock, November 17, 2009
Site comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245